admininitial plans.
Sources said a new plan was being worked on but would “not be very different” from the proposals rejected recently.
“There would be two or three changes . . . the revision of working capital and an arrangement with banks on a debt equity swap,” said one source.
“Old Mutual seem to have agreed to underwrite part of the rights issue which could result in it becoming the biggest shareholder in the company. The plan is more of amendments to earlier resolutions.”
Old Mutual currently holds close to 20 percent in the company.
Earlier, RioZim indicated it had already initiated consultations with shareholders to find a “positive way forward which will solve short-term financial issues and set the roadmap for the long-term success of the company”.
The EGM had been convened to consider a US$59 million rights offer and also present to shareholders a proposed debt retirement strategy.
About 47 percent of the shareholders rejected the initial rights offer proposal while 32 percent voted in favour of the initiative.
On the debt equity swap, 31 percent of shareholders endorsed the proposal, which was rejected by 46 percent of the other shareholders. Of the US$59 million RioZim wanted to raise, US$29 million was meant to clear
the debt, US$11,6 million for working capital, US$13,6 million for capital projects while US$13 million would be for recapitalisation.
About US$13,96 million had been earmarked for Renco, US$4,22 million for Empress Nickel Refinery and US$4,87 million for Cam & Motor Mine.
RioZim finance director Mr Emmerson Mungwariri recently said it was “common knowledge” that the company was heavily borrowed and this was “threatening the going concern status” of the group.
He also acknowledged RioZim was “technically insolvent”, but he said the balance sheet “did not capture the assets of the group fully”.
Despite working capital constraints, RioZim had been funding itself from internal resources over the past seven months. Total debt currently amounted to US$57 million with the principal at US$30,15 million and interest of US$26,8 million.
Online Reporter